TRADE NEWS BULLETIN Volume II Number 62 Wednesday, April 7, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ NAFTA AND GATT MAY ENCOUNTER DEADLOCK OVER BUDGET The U.S. Congressional Budget Office estimates NAFTA will cost the government $6 billion over the next ten years if implemented. The estimate reflects revenue loss from tariff elimination, but does not include anticipated costs of environmental and labor law enforcement, funds to assist displaced workers or border clean-up. House Majority leader Richard Gephardt, (D-Missouri) recently asked governors of Texas, California, Arizona and New Mexico to estimate these costs when implementing NAFTA. "In this time of fiscal restraint, we must work together to target appropriate funds to meet these needs," Gephardt said. No projections have been made so far, but some expect the final numbers will fuel NAFTA opposition, especially from lawmakers concerned with increased taxes and spending cuts. Likewise, if concluded, the Uruguay Round of GATT could mean an estimated $800 million loss in U.S. budget revenues per year from tariff reduction. "It's a potential nightmare," said an administration official. "It introduces a whole new dimension to getting (fast-track) through Congress, and the budget process is a process that is very hard to control." If the fast-track is deemed a "revenue-loser" it could spark strong opposition within Congress. Sources: John Maggs, "Trade Talks Become Entangled in U.S. Budget Process," JOURNAL OF COMMERCE, April 5, 1993; John Maggs, "Gephardt Asks For NAFTA Cost," JOURNAL OF COMMERCE, April 5, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ LEADERS SAY THEY ARE COMMITTED TO GATT COMPLETION The Uruguay Round, which has been stalled for the past six years mainly over agriculture disputes, may be getting a push from new governments. Leaders from France, the U.S., Japan and the United Kingdom have indicated they are ready to conclude GATT negotiations by 1994. After meeting with French farm leaders yesterday, Prime Minister Edouard Balladur indicated he wants to complete a new EC-U.S. farm deal. Balladur instructed French Foreign Minister Alain Juppe "to reach a trade peace with the United States." Balladur said France will have a proposal to settle agriculture disputes ready by June. "On GATT, we have moved from diplomacy of blockage to a diplomacy of movement," said Juppe during a radio interview. France remains firmly opposed to the oilseeds accord, which would limit the EC's oilseeds production area to 5.13m hectares and cut the volume of subsidized exports by 21 percent. "We can find a separate arrangement (on oilseeds) from the rest of the accord," said a spokesman for Balladur. "That doesn't mean we will simply give in." The Clinton Administration has also signaled that it is ready for a GATT conclusion soon. After returning from a meeting with Clinton, German Economics Minister Guenter Rexrodt said the U.S. will ask Congress by next week for a 10 month renewal of fast-track negotiating authority. "December 15 -- that's the new date," said Rexrodt. Fast-track, which requires Congress to reject or accept a GATT proposal without amendments, is viewed as crucial to completing the Uruguay Round. Japan's new foreign minister, Kabun Muto, said each side in the GATT talks has its weak and strong points. "We should look for compromises," he said. Muto recognized that the battle over rice imports would need to be addressed before reaching a conclusion. "We cannot say we should not allow the import of a single grain of rice permanently. But (for the time being) I will respect parliamentary resolutions (banning rice imports)," he said. Britain Industry Minister Timothy Sainsbury also called for a conclusion to the Round. "I really do think we have got to bring this matter to a conclusion by year end," he said during a meeting with Seattle business people. Sources: "New Japan Minister Says Compromise Key to GATT," REUTER, April 7, 1993; "France Offers Oilseeds Card," FINANCIAL TIMES, April 7, 1993; Nelson Graves, "France Ends Block, Ready to Make GATT Proposals," REUTER, April 7, 1993; "France Willing to Separate GATT Oilseed Accord," REUTER, April 7, 1993; "UK. Minister Says 1993 Critical for GATT Accord," REUTER, April 6, 1993; Lyndsay Griffiths, "Clinton to Seek New GATT Authority in Days," REUTER, April 6, 1993. ________________________________________________________ CLINTON MAY APPOINT NEW U.S. GATT COORDINATOR U.S. President Bill Clinton may appoint John Schmidt as negotiating coordinator for GATT. He currently works as a mergers-and- acquisition lawyer and was once an aide to Chicago Mayor Richard Daley. Schmidt has no direct trade experience. "We've got someone who knows the negotiations cold, and he's being replaced by a guy who never heard of GATT," said one U.S. official. Schmidt would replace trade veteran Warren Lavorel, who has represented the U.S. in world trade talks during the current Round. "It's a handicap for the Americans that's clear," said a senior EC official. "The man who really knew the files is leaving." Lavorel is slated to become deputy director general of GATT. Director General Arthur Dunkel has said he will not remain on at GATT past the end of his term, which expires in June. Mexican President Carlos Salinas de Gortari and Canadian Prime Minister Brian Mulroney have been mentioned as candidates to replace Dunkel. Sources: Keith M. Rockwell, "Business, Government Officials Fret About U.S. Pick for GATT Negotiator," JOURNAL OF COMMERCE, April 5, 1993; Frances Williams, "Dunkel to Quit GATT Post," FINANCIAL TIMES, March 30, 1993. ________________________________________________________ Events: "The North American Free Trade Agreement: Promise or Peril?" April 21, will explore the ramifications of NAFTA and its consequences for business, labor, and the environment. For information contact: Pacific Research Institute, 177 Post Street, Suite 500, San Francisco, CA 94108. Tel: 415-989-0833. Fax: 415-989-2411. ________________________________________________________ Resources: "A New Trade Order," an article by Peter F. Cowhey and Jonathan D. Aronson, discusses the emerging new global economic order. It specifically addresses foreign investment among companies and market access in the auto, semiconductor, and telecommunications industries. Included is a proposal for GATT reform. The article is printed in FOREIGN AFFAIRS journal, Vol. 72, No. 1. ________________________________________________________ Produced by: Kai Mander and Gigi Boivin The Institute for Agriculture and Trade Policy (IATP) 1313 Fifth Street SE, Suite #303, Minneapolis, MN 55414-1546 USA Telephone:(612)379-5980 Fax:(612)379-5982 E-Mail:kmander@igc.apc.org ________________________________________________________